As the authors of the tax cuts contained in House Bill 253, Associated Industries of Missouri supports the repeal of the prescription drug tax, fixing a proposal originally supported by Governor Nixon’s Department of Revenue.
AIM reminds citizens and the media that the repeal of the prescription drug tax exemption was part of a 200 page amendment to House Bill 253 dealing with the Streamlined Sales Tax.
The amendment was supported by the Missouri Department of Revenue and Nixon administration officials throughout the legislative session. Governor Nixon obviously has changed his mind on his support of that amendment, and AIM stands ready to help the governor remedy the situation by supporting legislation to repeal the prescription drug tax during the upcoming session of the legislature, along with any other problematic provisions of the Streamlined Sales Tax bill supported by the Governor.
The repeal of the prescription drug sales tax exemption, under the amendment originally supported by Governor Nixon, doesn’t occur until January of 2015, giving the legislature ample time to do away with this bad idea during the regular 2014 legislative session.
This is not the first time this year that Governor Nixon has had a change of heart on an issue that impacts the state’s senior citizens. In his State of the State message, Governor Nixon called for the repeal of the income tax credit for senior citizens who rented their homes and apartments. The money that was saved by that idea was to have funded increased early childhood education in the state.
In a last minute change of direction, the governor went to the state legislature during the session’s final days and requested funding for both programs, and the legislature agreed.
“AIM stands ready to help Governor Nixon with this latest dilemma,” said AIM president Ray McCarty. “The best course of action will be to override the governor’s veto of House Bill 253 which gives tax breaks to all of the state’s residents, including senior citizens. State legislators can then fix the problems created by the Streamlined Sales Tax part of the bill that was supported by Governor Nixon, and that contained this mistake, before it even becomes law. This will preserve the current sales tax exemption for prescription drugs. We can also take a hard look at the remaining parts of the Streamlined Sales Tax legislation and eliminate part or all of that measure if there are additional unintended consequences.”
AIM finds it odd that the governor should be flying around the state to campaign against a tax cut for every Missouri taxpayer. Missouri taxpayers paid $740 million more in taxes during the last fiscal year than the year before. Nearly $340 million of that total is over and above what the state budgeted. HB 253 is likely to take only $50 million away from that total.
The governor sites unrealistic and exaggerated figures claiming that the tax cut will cost the state $1.2 billion. He bases that assertion on an unconstitutional claim that taxpayers will be able to claim tax refunds for previous years. Article 1, section 13 of the Missouri Constitution prohibits the legislature from enacting any law that is “retrospective in its operation” meaning refunds are not permissible.
“The governor’s case against the tax cut is extremely weak,” said McCarty. “This repeal of the prescription drug exemption is his best shot at rallying support for his veto. The repeal was a drafting error – one his own Department of Revenue missed. This drafting error can and will be fixed by the legislature during the 2014 session, after the legislature stands up for Missouri citizens and overrides the governor’s veto of House Bill 253.”